AutoZone 2014 Annual Report Download - page 32

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Proxy
How are performance goals established?
Under the 2015 Plan, at the beginning of each fiscal year or other performance period, the Compensation
Committee must establish a goal, which may be a range from a minimum to a maximum attainable incentive
award. The goal may be based on one or more of the following measures:
• earnings (including net income)
• earnings per share (including diluted earnings per
share)
• sales
• market share
• operating or net cash flows
• pre-tax profits
• earnings before interest and taxes (EBIT)
• return on invested capital (ROIC)
• economic value added
• return on inventory
• EBIT margin
• gross profit margin
• economic profit
• net operating profit after tax
• earnings before interest, taxes, depreciation
and amortization (EBITDA)
• sales per square foot
• comparable store sales (including samestore
sales)
The goal may be different for different participants. The Compensation Committee will establish the goals
within ninety (90) days after the start of the applicable performance period, but in no event after twenty-five
percent (25%) of the applicable performance period has lapsed. The Compensation Committee will determine
the incentive awards to be paid under the 2015 Plan. All incentive awards will be paid within two and one-half
(2
1
⁄
2
) months following the end of the applicable performance period.
For the past thirteen (13) years, the performance goals established by the Compensation Committee under
the predecessor executive incentive compensation plan have been based on EBIT and ROIC. Additional
information about the establishment of incentive objectives can be found in “Compensation Discussion and
Analysis” on page 25.
No incentive may be paid under the 2015 Plan unless at least the minimum goal is attained. However, the
Compensation Committee may disregard for goal purposes one-time charges and extraordinary events such as
asset write-downs, litigation judgments or settlements, the effect of changes in tax laws, accounting principles or
other laws or provisions affecting reported results, accruals for reorganization or restructuring, and any other
extraordinary non-recurring items, acquisitions or divestitures and any foreign exchange gains or losses.
How are the incentive awards paid under the 2015 Plan?
After the end of each performance period, the Compensation Committee must certify the attainment of
goals, if any, under the 2015 Plan and direct the amount of the incentive award to be paid to each participant.
The Compensation Committee, in its discretion, may reduce or eliminate any incentive to be paid to a
participant, even if a goal was attained. Incentive awards may only be paid after the attainment of the goals has
been certified by the Compensation Committee. Incentive awards will be paid in cash.
What is the maximum compensation that a participant may receive under the 2015 Plan?
No participant may receive more than $4 million in any one fiscal year as an incentive award under the
2015 Plan.
20